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“A 3 Step Bumpy EU Energy Ride”

2.
Intro 3 step: which ones?
• Step 1: getting an internal EU market for electricity? Roughly
Yes! Does it matter? Much less than expected…
• Step 2: getting an internal EU market for gas? More or less a
kind of! Does it matter? Not much…
• Step 3: do these markets interact with other pillars of EU
energy policy (Security of Supply; 20-20-20 targets)? Yes!
They do a lot: they do their job…. (but no more)…
www.florence-school.eu

3.
STEP 1/ An EU internal market for
electricity… a journey from 1990 to 2015…
• Four “Yes” in four directions
• 1/ Short term Day ahead wholesale markets connected by
implicit access to physical interconnections
• 2/ Very short term balancing services crossing the borders of
“electrical zones”
• 3/ Retail competition blessed since a decade (2nd Package)
• 4/ Long Term Europeanization of grids operation and
investment going ahead (TYNDP – Grid Codes – PCIs)
www.florence-school.eu

4.
Done?
• Not so sure?
• 1/ Price control still in place (see France or Spain) 10 years
after the official launching of retail competition…
• 2/ Wholesale access control (see again France or Spain)
www.florence-school.eu

5.
Done? (2)
• Certainly not…
• 1/ New Wholesale revolution ignited by RES public push
• 2/ New retail revolution pushed by RES public push (millions
of “prosumers”) and smart retail grids
• 3/ But but: that comes more from EU “Out of the market”
energy policy than from the market … To be looked at latter
on…
www.florence-school.eu

6.
Concl for elec internal market?
• 1/ Done in the EU and nowhere else in the world (notably not
in the US)
• 2/ Done our way (other exist as “Wholesale” mkt with no
retail; or centralized wholesale mkt as PJM or UK 1990 etc.)
• 3/ Does not matter that much: why? It is an internal market
conceived in the 90’ to spur a “CCGT wave & Dash for gas” all
over the EU.
• 4/ Alas today we have massive national RES public pushes…
and massive CCGT redundancy (Spanish LNG terminals
working only at 50% capacity)
• 5/ Will we soon destroy all our EU market or rebuild it before
the 2020 horizon?
www.florence-school.eu

7.
STEP 2/ An EU internal market for gas…
much more difficult …
• Elec & Gas: both monopolies
• But: Elec has thousands of production units inside our EU
monopolies + a common multidirectional grid (= easy entry
with a small new CCGT plant);
• Gas: a handful of foreigner producers + “point to point”
grids… all tied with long term contracts (= hard to enter)
• Long way to go: to open new LNG terminals (big units) +
undo long term contract freezing of grids (Italy did 2 years
ago)
• BUT with help of economic crisis (-10% à to -20% gas
consumption) it suddenly worked: single price zone Denmark
to Italy; UK to Austria…
www.florence-school.eu

8.
gas… more difficult … but
• BUT BUT: we are also starting implementing an harmonized &
open internal market
• HARMONIZATION of transmission products across countries
through existing interconnections: PRISMA trading platform
• More advanced: Entry-Exit zones suppressing “point to point”
• Even More Advanced : merger of trading zones keeping
different short term balancing services on each border
• Other more advanced tool: Market zones connected by
implicit access to physical interconnections (Market Coupling)
• Also starting: Long Term Europeanisation of grids operation
and investment (TYNDP –Grid Codes – PCIs)
www.florence-school.eu

10.
Concl for gas internal market?
• 1/ Among big countries only EU and US have open gas
markets (but not of the same kind)
• 2/ US produces own cheap gas in an open architecture of
“long term contracted / fully booked / point to point “ gas
grid
• 3/ EU imports expensive gas from quasi cartel (Russia,
Algeria, Norway) + from other LNG providers in a regulated
frame of socialized “entry/exit” zones
• 4/ As Asia today sucks all LNG available & USA cannot flood
the entire world with shale gas
• 5/ EU cannot get the US low price while escaping the Asia
record price. For how long? Hum: let’s see…
www.florence-school.eu